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Difference between revisions of "Green People's Energy for Africa - Knowledge Hub - Financing"

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This knowledge product focuses on innovative approaches to promote end-user financing, particularly for solar PUE appliances for farmers and small businesses, such as solar water pumps/solar-powered irrigation systems (SPIS) and solar cooling. Sector-specific challenges and intervention approaches are first described before GBE programme findings are presented to enrich the sector discussion.
 
This knowledge product focuses on innovative approaches to promote end-user financing, particularly for solar PUE appliances for farmers and small businesses, such as solar water pumps/solar-powered irrigation systems (SPIS) and solar cooling. Sector-specific challenges and intervention approaches are first described before GBE programme findings are presented to enrich the sector discussion.
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== IV. Countries ==
 
== IV. Countries ==

Revision as of 09:39, 25 April 2024

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Green People's Energy for Africa
Knowledge Hub

Financing

Green People’s Energy provides financial support and capacity development measures to financing institutions, end-users and private companies to improve access to finance for rural enterprises and promote productive use of energy in off-grid rural communities.

I. Overview

Access to energy and connected productive technologies have the potential to promote the economic development of local enterprises in rural areas. However, financing productive use of energy (PUE) appliances, such as solar water pumps, mills or dryers, remains a challenge for small enterprises and rural populations in most countries in Sub-Saharan Africa.

More than 350 million people on the African continent do not have access to an account at a bank and are hence deprived of financial services. At the same time, the high upfront cost of the equipment needed for productive energy use often by far exceeds the financial capacities of small entrepreneurs, especially in rural areas. The provision of such services to rural users is even less attractive as a business case to many as their remoteness causes additional transport and infrastructure expenses. As they do not have any collateral which could act as a security towards the bank and comprehensive data on the creditworthiness of potential borrowers is missing, access to finance remains a central entry barrier. The lack of knowledge about decentralised renewable energy systems increases the perceived risk. Since finance institutions consider financing productive use of energy as risky, the interest rates proposed are high and jeopardise promising business cases for many users.

It is therefore important to facilitate access to finance for end-users. However, attention should also be paid to the fact that these initiatives are set-up sustainably meaning that business structures are set up in a way that allows them to finance themselves in the long-term.

Green People’s Energy provides financial support and capacity development measures to financing institutions, end-users and private companies to improve access to finance for rural enterprises and promote productive use of energy in off-grid rural communities.

Support for finance institutions to provide green finance

  • Building links between micro-finance institutions (MFIs), solar companies and organised savings and loans associations or cooperatives to access funds
  • Establishing a guarantee fund to reduce the risk of micro-loans provided to village loan associations for the procurement of PUE appliances
  • Offering financial incentives to microfinance institutions to develop and introduce a dedicated credit-line for renewable energy-based PUE appliances
  • Introducing revolving funds that can be re-used to fund new business once they have been paid back by initial lenders
  • Training of financial institutions on financing renewable energy solutions

Support for local enterprises as end-users

  • End-user grant schemes that make PUE appliances affordable in rural communities
  • Energy assessments and technical advice to local enterprises when applying for finance
  • Capacity building to ensure longevity of financing and savings for maintenance
  • Matching local enterprises with suitable MFI
  • Improving market links and sales techniques to raise income opportunities

Support for private solar companies

  • Offering results-based finance (RBF) schemes that provide incentives for each sold PUE appliance to enable cost reductions for end-users and slowly develop the market
  • Putting users in touch with solar companies
  • Providing funding for vouchers or other incentive schemes
  • Support them in organising appliance showcases and reaching rural customers

II. Case Studies

Many of the Green People's initiative's projects revolved around sustainable financing mechanisms and innovative approaches to overcoming the high initial costs of renewables. These measures worked on different scales, from end-user financing to companies as well as cooperatives and MFIs. To learn more about the different financing mechanisms, read the following case studies and project factsheets:

  • Link to Projects
  • Link to Case Studies
  • Link to KPF Facthseets
  • etc...

III. Publications


The GBE Thematic Knowledge Products are designed to share the knowledge and learnings about the topics gathered during the implementation and to make them accessible for practicioners. The following knowledge products outline the latest approches to PUE projects at the time of project implementation as well as learnings and recommendations from the GBE projects.


This knowledge product focuses on innovative approaches to promote end-user financing, particularly for solar PUE appliances for farmers and small businesses, such as solar water pumps/solar-powered irrigation systems (SPIS) and solar cooling. Sector-specific challenges and intervention approaches are first described before GBE programme findings are presented to enrich the sector discussion.


IV. Countries

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